Global Economy: Emerging Nations to Play Major Role

Bolstered by rapid growth and increasing domestic consumption, developing nations -- including India -- will account for 60 per cent of the global output by 2030, the OECD has said.

A grouping of mostly developed nations, the Organisation for Economic Cooperation and Development (OECD) said that the rapid growth of emerging nations has resulted in a global economic power shift. "The global GDP growth over the last decade owes more to the developing world than high-income economies. If this trend continues, developing countries will account for nearly 60 per cent of the world GDP on purchasing-power parity by 2030," OECD secretary-general Angel Gurria said.

According to the 31-nation grouping, the power shift towards developing nations has been accelerated by the financial meltdown. OECD nations, including the US, France and Germany, currently make up for more than 60 per cent of the world economy.

Gurria pointed out that while high-income countries were languishing in the worst recession since the 1930s, China and India continued to power ahead. "This is not a single standalone event, but the sign of an important structural transformation in the global economy..." Gurria noted in a statement on Friday, ahead of the G-20 Summit in Toronto, Canada.

Unlike their Western counterparts, emerging economies -- especially India and China -- have tackled the global financial crisis in a better manner and are growing at a healthy pace, the statement added. In the first quarter of 2010, the Indian economy grew 8.6 per cent while the Chinese GDP expanded 11.9 per cent.

According to an OECD study released earlier this month, India and China -- due to their rapid growth and sheer size -- exert influence on global trading and investment trends.

"... (India and China) influence the key macroeconomic variables that matter for poor countries: interest rates, the price of raw materials, and wage levels for low-skill jobs. They also have a major impact on global trading and investment patterns," the study said. Meanwhile, Gurria said that the tangible signs of shifting wealth are widespread. Indian multinational Tata is now the second-most active investor in sub-Saharan Africa. Over 40 per cent of the world's researchers are now based in Asia," he said.

"And by 2009, developing countries were holding USD 5.4 trillion in foreign currency reserves, nearly twice as much the amount held by rich countries," Gurria added.